After over 5 years, PPFAS Mutual Fund will be launching a new fund offer of a diversified equity fund.
In a recently held unitholder meeting on 22 November 2025 in Mumbai, the Chairman & CEO of the fund house, Neil Parikh, in discussions on strategy, performance and future plans, outlined a detailed plan to launch a large cap fund in January 2026.
This will be the third actively managed diversified equity fund launch after the Parag Parikh ELSS Tax Saver Fund and Parag Parikh Flexi Cap Fund.
Currently, both these schemes have dominant allocation to domestic largecaps – 71% in its tax saver fund and 61% in the flexi cap fund. So, the obvious question that arose is: Why is PPFAS Mutual Fund launching a largecap fund now?
To this, Parikh stated that the fund house has always maintained that it will launch a new fund only when “there is a general investor need” and they meet that if they “bring in some differentiation.”
According to Parikh, the upcoming large cap fund is designed to behave like an index fund, but with an active twist. In other words, an actively managed fund investing in largecap companies.
Largecaps are the top 100 companies by market capitalisation. They have access to resources, enjoy economies of scale, usually have an economic moat, are market leaders in their sectors, and are run by proficient management teams.
Given this, they have the ability to generate more stable returns than smaller companies.
PPFAS Mutual Fund believes that its upcoming large cap fund may generate value for investors through smart execution strategies.
What is the Investment Strategy?
The strategy is designed for investors who want exposure to India’s market leaders. The portfolio will largely mirror the Nifty 100 universe. These companies represent about 70% of India’s market cap.
The aim is to capture incremental alpha through “smart execution”. This, according to fund manager (equity), Rakun Tarachandani, includes leveraging cash–futures mispricing, index rebalancing flows, swap-ratio inefficiencies in mergers, and volatility-driven index-future discounts.
He also said, “We differentiate ourselves in how we obtain this exposure and how we implement and execute trades.”
This is unlike an index fund, where the trades are done on the rebalancing dates. In the case of an actively managed fund, it is at the fund manager’s discretion.
In the upcoming large cap fund, the stock weights will be closely aligned with the benchmark (the Nifty 100 Total Return Index – TRI), capped at 10% per holding, while it will maintain more than 95% equity exposure at all times.
Within equities, under normal circumstances, the fund will allocate 80-100% of its net assets to equities & equity-related securities of largecap companies.
When investing in largecaps, the fund shall keep no sector bias.
Also, up to 20% may invest in other than largecap companies (domestic) and foreign companies.
Within equities, the fund may invest in derivative instruments for hedging and non-hedging purposes as well.
For defensive consideration and liquidity purposes, up to 20% of the net assets would be invested in debt & money market instruments. It aims to identify securities which offer an optimal level of yields/returns, considering the risk-reward ratio. The aim is to control risk with rigorous or in-depth credit evaluation of the securities.
The credit evaluation shall include a study of the operating environment of the issuer, the short-term as well as long-term financial health of the issuer, ratings assigned, etc. In addition, the investment team of the AMC will study the macroeconomic conditions, including the political, economic environment and factors affecting liquidity and interest rates.
Further, the fund has the mandate to invest up to 10% of its net assets in units issued by REITs and InvITs.
A disciplined yet flexible long-term approach to investing would be followed with a focus on generating long-term capital appreciation.
What About the Expense Ratio?
PPFAS Mutual Fund plans to offer this large cap fund with an expense ratio between 10-30 basis points (100 basis points = 1%). Such a ratio is also charged by some of the Nifty 100 Index Funds.
In other words, for investors looking to have exposure to largecaps with an active strategy, Parag Parikh Mutual Fund is offering a low-cost option.
Is it an Appropriate Time to Launch a Large Cap Fund Now?
The bellwether, Nifty 50 index and the Nifty 100 index are both currently around just 1% away from their lifetime high.
That said, if we look at the trailing PE of the Nifty 100 index, it is currently at 22, lower than the 5-year average of 23 (as of 24 November 2025). This shows some reasonableness in allocating to largecaps.
Hence, the fund launch seems appropriately timed in the interest of investors.
Who Will Manage the Fund?
The fund will be co-managed by Rajeev Thakkar (CIO – Equity and Equity Fund Manager), Raunak Onkar (dedicated fund manager for overseas securities), Raj Mehta (Fund Manager – Equity), Rakun Tarachandani (Fund Manager – Equity), Tejas Soman (CIO – Debt and Fund Manager – debt), and Aishwarya Dhar (Fund Manager – debt).
Subscription Details
Parag Parikh Large Cap Fund will be available for subscription in January 2026 (date not yet announced). During the NFO period, the units will be offered at Rs 10 each.
The minimum application or investment amount is Rs 1,000 and any amount thereafter, for both lump sum and Systematic Investment Plan (SIP) purchases.
The scheme comes with the direct plan as well as a regular plan for investing, with both the growth option as well as Income Distribution cum Capital Withdrawal Option thereunder.
How Will Capital Gains be Taxed?
As a resident individual, if your holding period is less than or equal to 12 months, called Short Term Capital Gain (STCG), and it will be taxed at 20%.
For the units that are sold after 12 months, classified as Long Term Capital Gains (LTCG), it will be taxed at 12.5% without indexation benefit if the LTCG is more than Rs 1.25 lakh in the financial year.
Who Should Consider Investing in Parag Parikh Large Cap Fund?
This fund is suitable for investors with a high-risk appetite, ready to embrace some volatility, looking to create wealth over the long term with exposure to the top 100 companies by market capitalisation, and having at least a 5-year horizon.
The expected returns could be index-like, but potentially a little better because of the active investment strategy.
If you are looking for significant outperformance relative to the Nifty 100 – TRI, this fund may not be the one for you.
Also, don’t expect quick short-term returns from this fund.
Invest sensibly. Be a thoughtful investor.
Happy investing.
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